Is Now the Time for an In-Plan Roth Rollover?

November 06, 2012

It’s been two years now since the IRS issued Notice 2010-84 to provide guidance on in-plan Roth rollovers for 401(k) and403(b) plans, but have you had many employees take advantage of this option? The majority of employees I’ve spoken to over the past few years have shied away from doing an in-plan rollover due to the tax implication, with the exception of those employees who had previously made after-tax contributions and could roll those funds to the Roth without much, if any, of a tax hit. I had tended to agree with many of the employees who couldn’t justify paying taxes on income that had been deferred with the sole purpose of delaying that same tax, but now with the large tax increases scheduled to take effect in 2013 without congressional action, I am having second thoughts on the benefits of considering an in-plan rollover. Continue reading “Is Now the Time for an In-Plan Roth Rollover?”

What Another Obama Term Could Mean For Your Wallet

September 13, 2012

With the party conventions now over and the presidential election cycle in full swing, you may be wondering what the candidates’ plans might mean for you personally. Last week, we looked at how a Mitt Romney presidency could affect your wallet and this week we’ll do the same for a second Barack Obama term. Let’s start with the good news: Continue reading “What Another Obama Term Could Mean For Your Wallet”

What Could a Romney Presidency Mean For Your Wallet?

September 06, 2012

Now that Mitt Romney is officially the Republican nominee, polls are showing a tight race between him and President Obama. Given the state of the economy and Obama’s relatively low approval ratings, Romney has a fairly decent chance of being sworn in as our next President in January. Regardless of how you feel about this possibility, you may be wondering what a Romney presidency could mean for you and your wallet. Continue reading “What Could a Romney Presidency Mean For Your Wallet?”

7 Reasons NOT To Roll Your Retirement Plan into an IRA

August 30, 2012

Do you have a retirement plan from a former employer? Last week, I received two separate questions about what to do with a 401(k) from a previous job. Both times the person asking the question was thinking about moving it and both times they decided to leave it where it is after reviewing the pros and cons. Continue reading “7 Reasons NOT To Roll Your Retirement Plan into an IRA”

Are You Ready for “The Future of Retirement?”

August 23, 2012

In her blog post last week, Linda Robertson wrote about her experience at this year’s ISCEBS Employee Benefits Symposium and in particular, a presentation by former U.S. Comptroller General David Walker about “The Future of Retirement.” Walker spoke about the growing national debt and the impending insolvency of the Social Security, Medicare, and Medicaid programs. He then argued that it will take a combination of both tax increases and benefit cuts to dig our way out of the hole. To the degree that we don’t take these steps, we could see higher inflation by either the government trying to print money to cover the debt and/or investors dumping the U.S. dollar in anticipation of or reaction to a devaluation of the US dollar. So what does this all mean for us? Continue reading “Are You Ready for “The Future of Retirement?””

Going for the Gold Can Be Taxing

August 07, 2012

As the Olympics come to an end, I’m proud of how many medals our American team is coming home with, but not quite as thrilled with the tax bill they’ll face for winning. It’s not the value of the medal itself that the IRS wants its share of, it’s the prize money that comes with a gold, silver or bronze that is taxable. The U.S. Olympic Committee rewards Olympic medalists with cash honorariums: a gold medal brings $25,000, silver medals get $15,000, and a bronze is worth $10,000. As calculated by the Weekly Standard, the IRS will take $3,500 of a bronze athlete’s winnings, silver medalists will owe $5,385 in taxes, and winning the gold (which is priceless) will set Ryan and Michael each out $8,986 per race. Continue reading “Going for the Gold Can Be Taxing”

Financial Lessons from Olympic Volleyball Gold Medalist Kerri Walsh Jennings

August 06, 2012

“We can do better” was the phrase I heard in an athlete’s interview. Surprisingly, the words came out of the mouth of three time Olympic volleyball player and two time gold medalist, Kerri Walsh Jennings. Kerri and her partner, Misty May-Treanor, have never even lost one set in two Olympics games – Athens in 2004 and Bejing in 2008 – and they are working toward their third in London. So when I heard the phrase from Kerri, I wondered, how can you do better than never losing a match? How can you do better than gold? How can you do better than being the best in the world? Continue reading “Financial Lessons from Olympic Volleyball Gold Medalist Kerri Walsh Jennings”

Why I Changed My Mind About Whole Life Insurance

July 12, 2012

Updated June 14, 2017

Like most financial planners who don’t sell whole life insurance, I’ve always seen whole life insurance policies as great big rip-offs sold by sleazy life insurance agents. But my opinion changed a bit after a recent conversation I had with a Helpline caller. While I still think most people are better off buying term insurance, I’ve come to the conclusion that whole life insurance can be a better deal for some people. Continue reading “Why I Changed My Mind About Whole Life Insurance”

7 Steps to Your Financial Independence Day

July 04, 2012

This week America celebrates its 236^th birthday. To honor the occasion, why not declare your own personal “Financial” Independence Day. To me, financial independence equates to not having to worry about money, so if you are worried about your finances, take these seven steps to economic freedom: Continue reading “7 Steps to Your Financial Independence Day”

Reflections After Tax Day

April 20, 2012

We just got past April 15^th, otherwise known as “Tax Day” to many Americans. Actually, it was the 17^th this year, but who’s going to let a mere 48 hours change our perception of April 15^th? In the days leading up to April 17^th, it was impossible for me to go more than a few minutes without being asked a question about taxes, asking someone a question about taxes or seeing a tax piece on the news or online. I felt like I was seeing tax information even while I was asleep. Continue reading “Reflections After Tax Day”

1 Week to Go – Remind Your Employees of the IRA Deadline

April 10, 2012

The IRS has given us 2 extra days to file this year due to April 15^th falling on a Sunday and the recognition of Emancipation Day on April 16^th. This also provides a few extra days to consider contributing to an IRA. Your employees are probably aware that any changes they make to their 401(k) contributions can’t impact last year’s tax picture but do they know about the ability to make a prior year contribution to an IRA and how an IRA contribution can increase their overall tax refund with a Saver’s Credit? Continue reading “1 Week to Go – Remind Your Employees of the IRA Deadline”

Is Inertia Costing You Money?

February 23, 2012

Let’s face it. We human beings are generally creatures of habit. We tend to do the same things over and over even if we aren’t always thrilled with the result, something Albert Einstein called the definition of insanity. Continue reading “Is Inertia Costing You Money?”

5 Easy-to-Miss Tax Filing Mistakes

February 20, 2012

Whoops! In preparing for this blog, I realized that I made one of the easy-to-miss tax filing mistakes I was going to alert you to! I moved last year and was supposed to inform the IRS by filing form 8822. If they sent paperwork during the year, I can’t just say, “I never got it – I moved!” That is a bit like saying, “My dog ate my homework” and will just not fly with the IRS. I sure hope any statements were forwarded by my old post office. Shoot. Continue reading “5 Easy-to-Miss Tax Filing Mistakes”

Don’t Simply File Your W2 – Analyze It!

February 06, 2012

When you look in your mailbox these days, there is some kind of a tax form waiting for you just about every day. Most people simply glance at them to verify there are no mistakes but then they go into the current year’s tax file. After filing taxes, who pulls out their W2 and goes over it with a fine toothed comb? Not too many people I would assume. Most of us are so glad to get our taxes filed and over with that we are done and ready to move on to other things. Continue reading “Don’t Simply File Your W2 – Analyze It!”

Employee Tax Education: Are Prep Fees Too Taxing on Your Lower Income Workforce?

January 31, 2012

For many lower income employees, their yearly tax return provides more than just a refund of their tax withholding – it can include refundable tax credits that can add thousands of additional dollars to their bank account. The Earned Income Credit http://www.irs.gov/individuals/article/0,,id=150513,00.html (EIC) can add up to $5,751 for a working parent with 3 or more children making a yearly income of less than $43,998 and if the kids are under age 17 there could be up to an additional $1,000 child tax credit for each. Because of these large refunds, many tax preparation services aggressively go after these taxpayers with the temptation of getting their refund immediately, instead of waiting the average 2 weeks it takes to get their tax refund directly deposited by the IRS. Continue reading “Employee Tax Education: Are Prep Fees Too Taxing on Your Lower Income Workforce?”

The Basics of Income Taxes

January 25, 2012

Every year around this time we at Financial Finesse see an increase in demand for our Tax Basics workshop. The thing about our Tax Basics workshop is that it is exactly what it says it is—basic. We don’t discuss tax theory. We don’t attempt to understand the alternative minimum tax. Instead we focus on the tax concepts that affect the majority of taxpayers across the U.S. Understanding things like tax credits, exemptions, and deductions is critical to making sure you don’t end up on an H&R Block commercial finding out that you “voluntarily” let the government have over $8,000 because you didn’t know the tax benefits of education (in case you are interested, see IRS publication 970, Tax Benefits for Education). Continue reading “The Basics of Income Taxes”

Unconventional Wisdom: Confessions of a Financial Professional

January 18, 2012

When it comes to topics to write about in this blog, I usually look through the news or around the home, but this week’s topic actually comes from another reader, not because they asked me to write on a particular topic—although I welcome your suggestions—but rather because the reader gave me a new way to look at an old subject. I’ve written many times already on the topic of Roth IRAs, and each time I’ve taken the position that the Roth was somehow sacred, and that everyone in America should have one, but my new online friend gave me some compelling arguments as to why I shouldn’t be so down on traditional retirement accounts. Rather than try to recap the conversation, I welcome you to scroll through the dialogue that is found in the comments section of my June 8, 2011 blog titled To Roth, or Not to Roth. Continue reading “Unconventional Wisdom: Confessions of a Financial Professional”

Dividends Matter

April 11, 2011

I thought about the power of dividends when I worked on my mother-in-law’s taxes. She has been selling off an investment to help pay for her care and as the one who helps her with her taxes, I had to find her basis (what she originally paid for it) to report it on her tax return. She’d owned this mutual fund as long as I’ve known her and that means she has been taking a dividend from it for almost 20 years. When I dug into it, what I found was that she had a loss – her initial investment not only hadn’t grown but was less than she put in. What a disappointment! Continue reading “Dividends Matter”